How smart tech ended Brazil’s power theft crisis

Up to 40% of energy was being stolen from the grid in some areas

Six years ago, rampant electricity theft was costing Brazil billions of dollars in lost revenue. The problem landed in the lap of Siemens engineer Sergio Jacobsen, who found an ally in a tiny Brazilian start-up – and uncovered an unlikely group of thieves along the way

With the Amazon rainforest spanning the north of the country and an enormous stretch of low level terrain in the South, starting at the Atlantic Ocean and finishing at the foothills of Andes, Brazil lays claim to one of the most vast landscapes on the planet. It’s also home to 207 million people – and, unsurprisingly, is the tenth largest energy consumer in the world.

One of the men responsible for ensuring Brazil remains on top of energy innovation is Sergio Jacobson. A trained engineer, Sergio has worked at Siemens since leaving university in 2001 and now manages Brazil’s digital grid.

“I always wanted to work for Siemens,” he says. “It’s a reference point for all electrical engineers – for its size, for its innovation, for the connections, and for its opportunities for collaborations.”

But Brazil was facing a crisis

Six years ago, Sergio’s managers came to him with a problem. On average, a staggering 8% of energy was being stolen from the grid each year, with that number reaching up to 40% in some areas.

“It’s like having someone sneak into Siemens each night and taking half of the inventories being produced for that day,” says Sergio, who explains that energy theft is “a big problem in developing countries. It can cause blackouts, add to rising costs in energy prices and contribute to significant losses in government taxes.”

Pinpointing the problem

Sergio began by looking at how other countries were tackling the issue – but quickly realised that different countries were facing different challenges. “The United States works off a reliable energy grid, meaning they rarely face blackouts and power shortages,” he says. “Whereas in Europe, they’re facing the problem of how to integrate renewables.”

After months of research, Sergio narrowed the problem down to the software used in the meters. It takes incredibly complex algorithms to build a profile of who is using what and when, then constantly review the information to spot any unusual activity. Brazil’s outdated meters were far from being that sophisticated.

“The energy industry is not known for its speed,” says Sergio. “Most grids haven’t changed since the early twentieth century. The sheer scale and complexity of infrastructure makes innovation difficult.”

A meeting of minds

In 2011, Sergio was introduced to a Brazilian start-up called Senergy. Based in Belo Horizonte in southeastern Brazil, Senergy was a small group of engineers designing innovative smart meter software to help energy companies understand the journey of energy use.

Their software meant Siemens could access, collect and process data from smart meters, integrating the whole system of the IT environment of distribution power utilities. “Basically, Senergy’s software meant we got meter readings every hour,” says Sergio.

“Smart meters signal a seismic change in how energy is monitored and I’m keen to be at the forefront of it”

Sergio Jacobsen

Gathering the evidence

One of most common ways people steal energy is by tampering with meters to give false readings. In low income areas in developing countries, illegal domestic hook-ups to electricity lines are rife. But these levels of energy consumption are so miniscule, around 2%, that Sergio knew they couldn’t be responsible for the sheer volume of power being stolen.

There’s another reason why low-income customers would prefer to pay for their electricity: “In Brazil, if you don’t have an energy bill, all types of financial services are off limits,” says Sergio. “An energy bill is a reference for everything.”

So, if small, low-income families weren’t the culprit – who was?

The big reveal

After a year of receiving consistent data, Sergio and his team had their suspicions confirmed: Brazil’s power crisis was being caused by a group of small-to-medium businesses who were using stolen energy to slash their overheads. “With Senergy’s help, we were able to detect numerous businesses – including an ice factory – doing exactly that,” says Sergio.

The thieves use flimsy connections and cheap materials to illegally hook-up to the grid, which leaves long-lasting damage and makes it less reliable. But, more worryingly, falsifying meter readings blurs the real demand for energy. It means utilities can’t pinpoint surges and dips and manage the grid effectively.

The companies ciphering energy are not only stealing but also undercutting competitors by avoiding taxes. It means the people and organizations who DO pay for energy foot the bill for everyone else.

A long term solution

By building complicated user profiles, Senergy’s smart algorithms constantly compare an estimated consumption pattern to the amount of energy coming from the grid. If there are any anomalies, a team is sent to do an inspection.

Sergio and his team were so impressed with Senergy’s software that in 2012, they integrated them into Siemens.

“It meant we could give them the critical mass to go for bigger projects,”says Sergio. “For me, the integration highlighted what’s good about working for such a big company. For example, if you need a legal counsel, you just get on the phone and speak to someone. Or if you need a salesman in the very, very north of the country, we already have someone there.”

The next steps are to roll out Synergy’s software across similar developing countries. In 2016, 8.3% of energy across the world was lost to theft – that’s over $83M worth of energy unaccounted for. India alone loses $10 billion a year due to theft.

Smart meters signal a seismic change in how energy is monitored and Sergio is keen to be at the forefront of it. “It’s all about to change in the next two years,” says Sergio. “I’m really engaged with the issues and want to witness the change. Most importantly, I want to be part of it in Brazil.”

Sergio is a Future Maker—one of the 372,000 talented people working with us to shape the future. At Siemens, he’s responsible for digitalization and automation of energy, as well as two out of the eight R&D centers in Siemens Brazil. He lives in Brazil.